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The Negociosdigitales Story

The Negociosdigitales Story

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This is a chapter about a Venezuelan angel investing experience, written by Lorenzo Lara-Carrero in the book:
Angel Investing in Latin America
Batten Executive Briefing Series, Batten Institute
Darden Graduate School of Business Administration
University of Virginia 2005
This is a chapter about a Venezuelan angel investing experience, written by Lorenzo Lara-Carrero in the book:
Angel Investing in Latin America
Batten Executive Briefing Series, Batten Institute
Darden Graduate School of Business Administration
University of Virginia 2005

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Published by: Lorenzo Lara Carrero on Mar 09, 2013
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Angel Investing in Latin America
Batten Executive Briefing SeriesBatten InstituteDarden Graduate School of Business AdministrationUniversity of VirginiaChapter on a Venezuelan case by Lorenzo Lara-Carrero
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The Negociosdigitales story
 Negociosdigitales is a Venezuelan firm dedicated to venture capital investment, established in January 2000 by Vianney Sánchez-García, Fernando Núñez-Noda and myself. During 1999 we lead a group of neweconomy business people that created the Venezuelan Chamber of E-Commerce and came in close contactwith Venezuela’s dot com phenomena, which included not only local companies but many internationalones that set up shop in our country. By the end of 1999, at the height of the Internet boom, we starteddeveloping Negociosdigitales’ investment strategy focussing on business opportunities arising from theInternet and, more generally, digital technologies. This lead us to study carefully many new economySMEs and to create a methodology to guide our investment decisions. Since those days we haveinterviewed about 300 teams of technology oriented entrepreneurs, read their business plans and discussedwith them the economic value of their dreams.As so many entrepreneurs I have met through these years, my partners and I did not have a clear businessmodel at the beginning of our initiative. We just went on to take advantage of a business opportunity andour personal backgrounds and social networks. Venezuela´s entrepreneurial spirit had been kindled by amix of Internet fever, business franchising opportunities and a deepening economic crisis that dried outemployment for many young capable and creative individuals and weakened traditional and older familyoriented businesses.This awakening of business initiatives, was evident, for instance, in the monthly First Tuesday
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meetingswhere several hundred people went to discuss new Internet business projects and hopefully find investorswilling to support them. Negociosdigitales did not have investing funds readily available at those times.The founding team did have a strong background in business consulting and in the use of the Internet for marketing and commercial purposes. Thus, we boldly offered entrepreneurs
 strategic capital 
, meaning acombination of knowledge and financial assets supplied in proportions adequate to the needs of each
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Doctor Lorenzo Lara-Carrero is a businessman, consultant and researcher dedicated to thedevelopment of innovative business projects that focus on Venezuelan, Hispanic and Latin Americandigital markets. He is President of Negociosdigitales.com, a leading Venezuelan venture capitalinstitution, was founding president of the Venezuelan Chamber of E-Commerce and is a well-knownlecturer and author on topics related to the Latin American Internet industry.Http://lorenzo.lara.net/
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Inter-personal networking forum for venture capitalists, and specially for those seeking to partner withthem, that met in hundreds of cities throughout the world each monthly first Tuesday. Inhttp://www.firsttuesday.ie/ interesting historical commentaries can be found.
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 business and to its development phase, in exchange for a reasonable amount of shares in the starting business.What started as a selling pitch, with only some actual useful knowledge assets at hand and very little fundsreadily available, turned into the
 strategic capital investment process
, a management and investmentstrategy
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, that seeks to align the entrepreneurs and investors interests from the beginning of the investment process to the exit phase. This approach to Angel and Venture Capital investment, suited to LatinAmerica's business environment, arose from our experience in Negociosdigitales.By the end of 1999, even before establishing formally our company, we negotiated successfully our firstknowledge assets investment with Tucarro.com
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, a small startup challenging the traditional classified medialeaders through an online service. In parallel we helped create Seguridadaldia.com, a crime prevention portal, in association with a well known Venezuelan writer and consultant on those issues, complementinghis expertise with our knowledge of the Internet as a business environment. Tucarro.com has grown to become the leader in the classified online and printed media industry in Venezuela, with its sister brandsTuinmueble.co, Tulancha.com, Tuavion.com and Tumoto.com, with strong footholds in Colombia andPuerto Rico. Negociosdigitales´ shares in Seguridadaldia.com were given back shortly to the other partner so that he could follow his personal vision and goals; this crime prevention portal is still widely quoted andfollowed.With two strategic investment processes going on, my partner Vianney Sánchez and I
burned the ships
anddevoted entirely our time and efforts to strengthening Negociosdigitales. Fernando continued in anadvisory roll. During 2000, we identified a very capable group of software developers who had created anInternet online service, Hiperlist.com, that was intensively used by hundreds of thousands of people fromall over the world to manage email lists and other groupware services with no cost to users. Advertisingwas supposed to pay for the entrepreneurs efforts. Unfortunately, Hiperlist was no good at making money but the software underlying it and the people who had developed it were great. Thus Negociosdigitalesconvinced them to change their business model and focus on developing services for large corporate clientsin need of sending bills and newsletters to their large costumer base. Together, the entrepreneurs and Negociosdigitales created Imolko in November 2000, a company that pioneered world class email listmanaging services to corporations and now provides all sorts of electronic messaging platforms. At the endof 2003, Negociosdigitales sold its shares in Imolko to Soluciones Láser, a Venezuelan IT company thathas strengthened Imolko. Thus Negociosdigitales was able to execute its first exit strategy, with small
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The details of these strategy are described in Lorenzo Lara-Carrero y Vianney Sánchez García.
Capital de riesgo: El caso de las pymes tecnológicas - Cómo alinear los intereses de losemprendedores y los capitalistas de riesgo
. Debates IESA, volumen IX, número 1, octubre – diciembre2003, Caracas, Venezuela. An English version is available upon request tolorenzo@negociosdigitales.com.
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Http://www.tucarro.com/
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financial gains, much learning and the satisfaction of securing Imolko´s advance with an adequate business partner.Going back to the beginnings of formal life for Negociosdigitales in 2000, I should mention that we setupan alliance with Torres Plaz Araujo (TPA), one of Venezuela´s leading legal firms, to share clients and tocooperate in consulting projects. This brought another strategic investment opportunity in Perfilnet
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, a jobsite created by head hunter Angel Canakis and his collaborators. Negociosdigitales joined them in April2001 to strengthen marketing strategies by investing knowledge assets in Perfilnet.Most importantly, a strong Venezuelan family economic group, let´s call it FMP, approached Negociosdigitales about developing an adequate investment strategy for Internet based initiatives. TPAwas a very convincing reference that added credibility to Negociosdigitales´ successful strategic investmentrecord. Thus, in 2001, both FMP and TPA joined Negociosdigitales founding partners as shareholders andcontributed working capital to strengthen the company. At the same time, FMP and Negociosdigitalessigned a contract that provided a credit line for $2 million that would finally allow the completion of thestrategic investment process.By March 2002, Negociosdigitales had made a couple of further strategic investments. One in ObraWeb,an online supplies catalogue for the construction industry in hispanic countries and in Tendenciasdigitales,a market research company specialized in the digital markets and in the use of Internet technologies for such purposes. During this year, the Corporación Andina de Fomento – CAF – chose Negociosdigitales asa vehicle for strengthening the development of innovative, technology based, small and medium enterprisesin Venezuela. CAF supplied further working capital for Negociosdigitales and a small but prestigiouscredit line to complement its investment capabilities.By the beginning of 2003, Negociosdigitales had accomplished two main objectives. First, we had learnedto identify successful teams of entrepreneurs focussed on developing companies that took advantage of technology based business opportunities and, most importantly and difficult to accomplish, we had beenable to negotiate with them partnerships involving strategic investments. As proof of this accomplishment, Negociosdigitales had an attractive portfolio of invested companies. Secondly, we had gained a reputationthat allowed for establishing a network of Angel and institutional investors that would supply funds for investing venture capital in suitable business opportunities.The seed for this Angel investors network, was an innovative investment process that we completedsuccessfully by the end of 2003 in SinFlash, a small media group specialized in entertainment and life styletopics. Five Angel investors lead by Negociosdigitales got together to create, following internationalstandards, a small special Venture Capital fund that supplied cash to SinFlash for strengthening its web
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Http://www.perfilnet.com/
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